Russian Base Oil Imports Up, Exports Down in 2020

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Russian Base Oil Imports Up, Exports Down in 2020
More than 95% of the Russian base oil shipments meant for export are transported by Russian Railways (RZD). © SC Image

Russia exported about 1 million metric tons of base oils in 2020, a 9% decrease compared to the year before, while imports increased by 15% on a wave of steady domestic demand, a Moscow industry event was told in May.

“In 2019, Russian imports of base oils increased by 40% compared to 2018,” Andrey Savin, base oil trader for Penthol, told GBC’s Russia and the CIS Base Oils and Lubricants conference, held in person and online. “The country’s importing potential remained in 2020 primarily related to insufficient [API] Group II and Group III domestic availability.” 

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Savin said imports were also affected by the COVID-19 pandemic, which slowed economic activity in the country.

The trading firm Penthol is a global distributor of oil products and petrochemicals with offices in the Middle East, Europe and Houston. Savin is based in the company’s office in Istanbul.

Russia imported about 105,000 tons of base oils last year. Group I base oils made up the smallest portion of that amount – only 8,000 tons, which was down 15% compared to 2019. Russia imported about 22,000 tons of Group II in 2020, or 11% more than in 2019. Group III base oil imports rose 15% to 65,000 tons.

The country also imported about 9,000 tons of naphthenic base oils – twice as much as in 2019, according to Penthol.

“Increased quality properties of metalworking fluids and specialty oils could contribute to further import growth of these base oils,” Savin said. “Also, we expect Russian localization of production of finished lubricants formulated with naphthenic base oils.”

Russia’s domestic base oil demand held steady in 2020, resulting in decreased export availability, according to Argus Media, a consultancy. The country exported 1.02 million tons of base oils, down by 97,870 tons from 2019, Argus Manager Irina Vinogradova told the conference.  

Russia exported larger volumes of base oil in 2020 than in 2019 only to Central and East Asia, as well as the South Caucasus destinations. Russia exported smaller volumes of base oil in 2020 than in the prior year to all other main export destinations, such as the Baltic and Black Sea ports, the rail routes to Eastern Europe – such as Ukraine or the Baltic countries – as well as the Far East.

Argus found Russian refiners scheduling shorter maintenance shutdowns in the first quarter of 2021, resulting in slightly higher export availability, which was mostly shipped through Baltic ports in Europe. In the first three months of 2021, Russia exported 327,465 tons of base oils, Argus said, citing data by the state rail transportation monopoly Russian Railways.

More than 95% of all Russian base oil shipments meant for export are moved by the state’s railway transporter.  

“Demand for this product remains high amid tight availability in Europe,” Vinogradova said. “This in turn incentivized Tatneft to increase its Group III base oil production and export flows.”

She estimated that Tatneft increased its production by nearly 20,000 tons in the first three months of 2021, compared to the same period last year, “most of which were shipped under term contracts via Black Sea ports.”

In the first quarter of 2020, Tatneft produced about 40,000 tons of Group II and Group III base oils, while in the same period this year the amount was 60,000 tons, Argus said, citing data gathered by the Central Dispatching Department of the Fuel and Energy Complex (Cdu Tek), a branch of the state Russian Energy Agency.

Argus said that Slavneft’s refinery in Yaroslavl is still facing quality issues in the form of low viscosity index product. The refinery produced about 23,000 tons of base oils in the first quarter of 2021, similar to production for the same period last year, according to Cdu Tek. Slavneft is a 50-50 joint venture between Gazprom Neft and Rosneft.

Tatneft‘s Taneco refinery in Niznekamsk has capacity to make 90,000 t/y of Group II and 100,000 t/y of Group III base oils, while Slavneft operates a 100,000 t/y Group III base oil plant in Yaroslavl.

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